Last week, I was invited to speak at a seminar in Shanghai on the topic "How Shanghai can learn from the experience of Hong Kong's free trade port?" I said that a combination of the two factors, which had made Hong Kong a success, could be duplicated in Shanghai. One factor is maintaining high-level and full-scale opening-up, covering free movements of goods, services and capital over a long period of time; and the other is the population increase measured against land available.

When Britain occupied Hong Kong Island in 1841, it was a small fishing village by the South China Sea. The colonial troops wanted to transform the island into a military base for the British Royal Navy. But, London decided to turn the area from a fishing village into a free trade port, implementing a far-sighted "free trade port policy". Therefore, the Hong Kong economy became an entrepot.

However, if no local manufacturing industry had been established and developed in the 1950s, the city's economy wouldn't have extended from entrepot trade to all kinds of foreign trade; and if there had been no free capital movement in the 1960s and 70s, the economy wouldn't have enlarged from manufacture into a series of industries. By taking advantage of the unique high-level opening-up in the second half of the 20th century, Hong Kong changed from being a little-known place into a well-known international metropolis.

Entering the 21st century, economic globalization has been accelerating at a multi-dimensional rate. So, a high degree of opening-up, not only of free trade but also free capital movement, may be one piece of Hong Kong's experience that relates to Shanghai.

The PFTZ launched with a series of reform and opening-up tasks including facilitating investment, deepening RMB interest rates marketization and realizing full convertibility of the RMB. However, Shanghai PFTZ needs to translate all these tentative policies and measures from theory into practice, to ensure they are successful.

On the other hand, if Hong Kong had no increase in land to cater to the growing population, the economy wouldn't have expanded from relying only on entrepot trade into diversified industries.

When Hong Kong Island was occupied by Britain, only a few thousand people resided in a narrow area of 100 sq km. A significant change took place after World War II. From the 1950s to the 1970s, the city's population increased by 1 million per decade, while land increased via reclamation by 1 sq km yearly on average. Without more than 1,000 sq km of land with 7 million people, Hong Kong couldn't build a cluster of international finance, transportation and commerce hubs.

Comparably, the Shanghai PFTZ, will most probably be limited to 29 sq km. The zone itself cannot become an economy on a large scale. Instead, all reform and opening-up policies and other measures tested in the PFTZ should be duplicated and spread in Shanghai, the Yangtze River Delta and the mainland. Therefore, Hong Kong's experience, not only successful but also failed, implies Shanghai could learn a lesson from Hong Kong.

The most serious lesson of Hong Kong's experience is that the city seriously neglected the disadvantage of the "visible boundary" established in history. As economic globalization inevitably and irreversibly ushered in a new era of severe competition based on the region's economy rather than just a single city, Hong Kong, shows the disadvantage of its land limitation and population. Only by integrating into the mainland, particularly the Pearl River Delta, can Hong Kong remain an international finance, transportation and commerce center. There is no other alternative. However, Hong Kong's mainstream vision is restricted by the "invisible boundary" of ideological difference between two sides of the Shenzhen River, obstructing the territory from properly handling its "visible border".

There is neither a "visible border" nor "invisible boundary" between the Shanghai PFTZ and Shanghai, between Shanghai and the Yangtze River Delta, and between the Yangtze River Delta and the mainland. Many people working in the Shanghai PFTZ have an open mindset and the foresight to innovate and create. To this extent, Hong Kong may have to learn from Shanghai in order to overcome the obstacles and difficulties on the SAR's way ahead.

The author is a veteran current affairs commentator.

(HK Edition 10/16/2013 page1)